Author Topic: Paying for Graduate School- Student Loans or Sell Stock?  (Read 1034 times)

wealthviahealth

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Paying for Graduate School- Student Loans or Sell Stock?
« on: November 15, 2019, 10:17:17 AM »
I just turned 30 and have been looking at making a major career shift that would require going to graduate school for 2 years and this
could not be done with a full time job. The program would cost $54k in total but this career change would not be possible without the degree
.
I finished paying off my student loans from under-grad earlier this year and that was a HUGE feeling of accomplishment, so in many ways it hard to fathom going back to square one on this. I have enough money in stocks in post tax accounts to pay for the program and 2 years of rent and living expenses but this would also be significant blow to my identity and feeling of financial security/accomplishment. I have a decent nest egg in retirement accounts and my HSA that would remain untouched but it is also a bit hard to envision 2 years of not making contributions to these accounts as I would be a full time student.

 If I were only 10 years out from FIRE I would stick it out in my current line of work but I like the thought of feeling true meaning and happiness in the work I will be doing for the next 20 years. Curious to hear how others have gone about financing such a career change and if there is anything they wish they would have known/done before making the leap.

Laura33

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Re: Paying for Graduate School- Student Loans or Sell Stock?
« Reply #1 on: November 15, 2019, 10:25:51 AM »
Pay your way through with investments and a part-time job -- student loan interest rates are not low enough to assume that the market will consistently do better over your payoff period.  Unless your new job would make you eligible for PSLF -- then you could consider taking some loans, just make sure to dot all the i's and cross all the t's.

NorCal

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Re: Paying for Graduate School- Student Loans or Sell Stock?
« Reply #2 on: November 15, 2019, 11:46:21 AM »
Are you eligible for subsidized loans where interest doesn't accrue until you graduate?  If so, I would strongly consider using that for a portion of your studies.

I found a path that worked well for my MBA.  I used savings and part time work to cover living expenses, and used debt for tuition. 

I didn't care for the debt after graduation, so I eventually paid it off with savings anyways.  But it was good to have that flexibility during my studies without draining all of my savings.

teltic

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Re: Paying for Graduate School- Student Loans or Sell Stock?
« Reply #3 on: November 15, 2019, 04:28:00 PM »
For loan vs paying cash... It comes down to what percentage the loan is.  For me, if it's less than... 4-5%, I'd do the loan.  anything higher than that seems too easy of a "guaranteed" return.  If there's an interest free loan while you are in school, but then 7+%, I'd still go that route, but be ready to pay 100% of it off the second interest starts ticking.

$54k is a lot.  What are your projections to starting salary &  mid career salary? After spending $30k for a masters degree... I kind of regret it.  I luckily had work pay for $12k, but if I could go back... I probably wouldn't have done it (masters in finance).

mozar

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Re: Paying for Graduate School- Student Loans or Sell Stock?
« Reply #4 on: November 15, 2019, 09:19:31 PM »
Does a local community college have some of the classes that you need for the degree? It can help you determine if you really like the subject, save money if you can transfer the credits, and make you a better candidate.

FatFI2025

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Re: Paying for Graduate School- Student Loans or Sell Stock?
« Reply #5 on: November 16, 2019, 10:21:27 PM »
I just turned 30 and have been looking at making a major career shift that would require going to graduate school for 2 years and this
could not be done with a full time job. The program would cost $54k in total but this career change would not be possible without the degree
.
I finished paying off my student loans from under-grad earlier this year and that was a HUGE feeling of accomplishment, so in many ways it hard to fathom going back to square one on this. I have enough money in stocks in post tax accounts to pay for the program and 2 years of rent and living expenses but this would also be significant blow to my identity and feeling of financial security/accomplishment. I have a decent nest egg in retirement accounts and my HSA that would remain untouched but it is also a bit hard to envision 2 years of not making contributions to these accounts as I would be a full time student.

 If I were only 10 years out from FIRE I would stick it out in my current line of work but I like the thought of feeling true meaning and happiness in the work I will be doing for the next 20 years. Curious to hear how others have gone about financing such a career change and if there is anything they wish they would have known/done before making the leap.

Well the good news is that the school year is offset from a tax year. So that means that with a two year program where you matriculate in the Fall, you will only miss one year of 401k and HSA contributions.

I'd definitely go the subsidized loan route and see what's available after graduation. I refi'd my grad loans to 1.95%. I could pay them off but the rate is so low it doesn't make sense to me. Of course, no guarantees these rad refi deals will be around in a few years.